If you ever talk to engineers or product designers working on autonomous vehicles, space capsules, rockets or engine components, you would hear them mentioning how difficult and time consuming it is to find optimal manufacturing process for their needs. On the other hand, if you have a chance to talk to machine shops, you would feel their frustration about finding new customers and the amount of the time and energy spent responding to customer inquiries. This is exactly where Xometry comes to play. Operating its own machine shop and leveraging machine learning algorithms, Xometry has built a proprietary manufacturing platform enabling engineers and designers to tap into capacity and capabilities of a network of machine shops around the country. As soon as customers upload 3D files, they instantly get manufacturability analysis, price and expected lead times feedback. Thanks to the ample manufacturing partner network, Xometry can deliver high quality parts at a very low price with fast lead times.
Due to its unique capabilities, Xometry has quickly been able to grow its customer base. This includes cutting-edge startups to Fortune 1000 companies, such as 44% of Fortune 500 motor vehicles and parts incl. top automotive manufacturers like our parent company, BMW.
On-demand manufacturing is estimated to be a highly fragmented $70B market in the US, comprising of thousands of machine shops operating regionally and far from automation. As illustrated below, we believe that flipping the local machine shop business model into a machine-learning driven marketplace model has significant advantages such as strong two-sided network effects. The more machine shops sign up on the platform, the more variety of processes and the larger capacity Xometry can offer. At the same time, this drives the quality up and the cost down as there will be a larger set of providers with spare capacity who could take the job. Larger set of capabilities, higher capacity, top quality and lower prices attract more and more customers to the platform. This eventually attracts more and more machine shops to the platform. Every new customer and every new manufacturing partner makes the platform better for everyone involved.
Here at BMW i Ventures, we have been fortunate to be a part of the Xometry’s success story. Since we’ve led the $15M Series B round in June 2017, the company’s achievements have been nothing short of remarkable. Back then, Xometry’s marketplace business line was nascent with only about 250 machine shops in the network, and in-house business line was still playing a significant role. Being impressed by the data-driven, world class team led by Randy Altschuler (serial entrepreneur- previously founded and sold CloudBlue and OfficeTiger) and Laurence Zuriff (previously investor at Granite Capital), we were convinced that the marketplace model could be the future of on-demand manufacturing and Xometry could play a key role. Very much in line with our projections, Xometry has been able grow its top line rapidly. At the same time, the company has managed to consistently deliver high quality parts so that it was named as a BMW Tier 1 Supplier. Additionally, Xometry acquired MakeTime, another leader in the manufacturing-on-demand space to create the single largest manufacturing partner network in the industry during the summer of 2018, while adding a very talented team led by Drura Parrish to the Xometry family. Simultaneous with the acquisition, Foundry Group led a $25M Series C round investment in Xometry, which we have participated as well. Currently, Xometry boasts an impressive network of more than 2,500 machine shops across the country with more than 700K parts quoted.
Today, we are delighted to double down and join an impressive $50M Series D funding led by Greenspring Associates along with existing investors incl. Foundry Group and Highland Capital, and new investors such as Dell Technologies Capital. Equipped with the necessary resources and great partners, we are convinced that the future of on-demand manufacturing belongs to Xometry!
Baris is an engineer with work experiences in venture capital and top-tier investment banking. At BMW i Ventures, Baris has been closely involved with the investments in Zūm, Tekion, Vera, Mapillary, Xometry, Strivr, Claroty, Chargepoint and Life360. Baris holds a Master of Engineering and Technology Management from Duke along with an MBA (Dean’s Fellow) from UNC Kenan-Flagler Business School, where he led VCIC, the world’s largest venture capital competition. Please feel free to reach out on email@example.com.
Originally published at https://www.bmwiventures.com on May 13, 2019.